Will Free Trade Agreements Really Create Jobs?

Caterpillar products produced in Illinois, like the ones shown above, will be able to be exported to South Korea, Colombia and Panama duty free if Congress passes trade agreements with those countries on Wednesday. Obama says the agreements will provide a major boost to U.S. exports and support tens of thousands of jobs.

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Originally published on October 12, 2011 8:27 pm

Congress approved with bipartisan support Wednesday much-delayed free trade agreements with South Korea, Colombia and Panama. The Obama administration and supporters in Congress have labeled these agreements jobs bills, though there are questions about how many jobs will really be created.

When Bill Lane, the Washington director for the heavy equipment maker Caterpillar, looks at the three trade deals, he sees opportunity.

"Once these agreements go in effect, Caterpillar products produced in Illinois and Mississippi and the Carolinas will be able to be exported to Colombia, Panama and Korea duty-free," Lane says. "That's a big deal."

A More Level Playing Field

He says these agreements will create a competitive opportunity for his company. Caterpillar's off-highway trucks and bulldozers will cost less for buyers in these countries because the tariffs will go away. That, he says, will create more job security for employees in America.

"Let me just put it this way. About eight years ago they passed the Chile free trade agreement. Caterpillar exports to Chile tripled," Lane says. "These agreements have real-life implications and what they've all done is increase U.S. exports."

Based on a government study of the agreement with South Korea, machinery and equipment makers, pork and beef producers and the chemical and plastic products industries have the most to gain. President Obama has said combined, the three trade deals will support tens of thousands of jobs across the country.

"This is so simple," says Democrat Max Baucus of Montana, one of many senators from both parties to take to the floor Wednesday in praise. "Everybody should be for this. It does create a more level playing field."

On the House floor, though, some Rust Belt Democrats weren't so sure.

"Every single year we have a trade deficit with South Korea now," says Rep. Marcy Kaptur of Ohio. "Why do we want to make it worse?"

Growing Skepticism Of Free Trade

These members reflect a growing skepticism in the general public about whether free trade agreements really are good for the U.S. economy.

"I've seen first hand the negative effects that trade agreements have had on our manufacturing sector and this one is estimated to displace 159,000 jobs and increase our trade deficit with Korea by $16.7 billion," says Rep. Mark Critz, a Democrat from Pennsylvania.

The same government report that says beef producers will be real winners also finds that in the case of South Korea the trade deficit is likely to grow. Lori Wallach, director of Public Citizen's Global Trade Watch, says supporters are looking only at the deposits and none of the withdrawals.

"It is true that our exports will increase. The problem is our imports from Korea are going to increase a lot more," Wallach says. "If you subtract the jobs that will be wiped out by imports from the jobs that will be created by exports, you come up with a deficit."

Even some supporters of these agreements admit there will be winners and losers. Jobs will both be created and destroyed, which is why Democrats insisted on also extending a program to assist displaced workers. In any case, a majority in Congress has decided that the upsides outweigh the downsides.

That gives hope to John Murphy, vice president for international affairs at the U.S. Chamber of Commerce. Murphy has been working to cement these trade deals for nine years.

"We have a moment here where Democrats and Republicans in large numbers are working together on a jobs initiative," Murphy says. "We're optimistic that trade, which in the past has been divisive, is becoming somewhat less so."

For Congress, it was a rare moment of bipartisanship and speed after years of debate over trade policy. The president sent the agreements over to Congress just nine days ago. Wednesday's vote comes just in time to greet the president of South Korea, who will appear before a joint session of Congress on Thursday.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

Transcript

GUY RAZ, host: Congress is voting today on three much-delayed free trade deals with Panama, Colombia and Korea. All are expected to pass. The Obama administration and supporters in Congress have argued that these agreements are jobs bills, though, as NPR's Tamara Keith reports, there are questions about just how many jobs they'd likely create.

TAMARA KEITH: When Bill Lane looks at the three trade deals, he sees opportunity. Lane is the Washington director for Caterpillar, the heavy machinery maker.

BILL LANE: Once these agreements go in effect, Caterpillar products produced in Illinois and Mississippi and the Carolinas will be able to be exported to Colombia, Panama and Korea duty free. That's a big deal.

KEITH: He says these agreements will create a competitive opportunity for his company. Caterpillar's off-highway trucks and bulldozers will cost less for buyers in these countries because the tariffs will go away and that will create more job security for employees here in America.

LANE: Let me just put it this way. About eight years ago, they passed the Chile free trade agreement. Caterpillar exports to Chile tripled. Two years ago, they implemented the Peru free trade agreement. U.S. exports to Peru are up 60 percent. These agreements have real-life implications and what they've all done is increased U.S. exports.

KEITH: Based on a government study of the Korea agreement, machinery and equipment makers, pork and beef producers, and the chemical and plastics products industries have the most to gain. President Obama has said, combined, the three trade deals will support tens of thousands of jobs across the country. Montana Democrat Max Baucus was one of many senators from both parties to take to the floor today in praise.

Representative MAX BAUCUS: This is so simple. Everybody should be for this. It does create a more level playing field.

KEITH: On the House floor, though, some rust belt Democrats weren't so sure. And they reflect a growing skepticism in the general public about whether free trade agreements really are good for the U.S. economy. Here's Ohio's Marcy Kaptur and Pennsylvania's Mark Critz.

Representative MARCY KAPTUR: Every single year we have a trade deficit with South Korea now. Why do we want to make it worse?

Representative MARK CRITZ: I've seen, firsthand, the negative effects that trade agreements have had on our manufacturing sector and this one is estimated to displace 159,000 jobs and increase our trade deficit with Korea by 16.7 billion dollars.

KEITH: The same government report that says beef producers will be real winners, also finds that in the case of Korea, the trade deficit is likely to grow. Lori Wallach is director of Public Citizen's Global Trade Watch. She says supporters are only looking at the deposits and none of the withdrawals.

LORI WALLACH: It is true that our exports will increase. The problem is our imports from Korea are going to increase a lot more. And so as a result, if they look at the net number, if you subtract the jobs that'll be wiped out by imports from the jobs that will be created by exports, you come up with a deficit.

KEITH: Even some supporters of these agreements admit there will be winners and losers. Jobs will both be created and destroyed, which is why Democrats insisted on also extending a program to assist displaced workers. In any case, a majority in Congress appears to have decided that the upsides outweigh the downsides. And that given hope to John Murphy. He's the vice president for international affairs at the U.S. Chamber of Commerce and has been working to cement these trade deals for nine years.

JOHN MURPHY: We have a moment here where Democrats and Republicans in large numbers are working together on a jobs initiative so we're optimistic that trade, which in the past has been divisive, is becoming somewhat less so.

KEITH: A rare moment of bipartisanship and speed. The president sent the agreements over to Congress just nine days ago. Today's vote comes just in time to greet the president of South Korea, who will appear before a joint session of Congress tomorrow. Tamara Keith, NPR News, the Capitol. Transcript provided by NPR, Copyright National Public Radio.